DIAPERS AND WET WIPES

MANUFACTURING INDUSTRY

አማካሪ ፡ ግርማዬ አበበ

0994614040

DEBRE BIRHAN CITY ADMINISTRATION, NORTH SHOA ZONE,

AMHARA NATIONAL REGIONAL STATE, ANRS, ETHIOPIA

ADDIS ABABA, 2023

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 TABLE OF CONTENTS
TABLE OF CONTENTS ..............................................................................2

LIST OF TABLES AND FIGURES .............................................................4

List of Tables .................................................................................................................... 4

List of Figures .................................................................................................................. 4
LIST OF ABBREVIATIONS .......................................................................5

1. EXECUTIVE SUMMARY .......................................................................7

2. PRODUCT DESCRIPTION AND APPLICATION ..............................9

3. MARKET STUDY, PLANT CAPACITY AND PRODUCTION

PROGRAM.................................................................................................. 10

3.1. Market Study ......................................................................................................... 10

3. 1. 1. Present Demand And Supply........................................................................... 10
3.1. 2. Projected Demand............................................................................................ 14
3. 1. 3. Pricing and Distribution ................................................................................... 14
3. 2. Plant Capacity ........................................................................................................ 15
3. 3. Production Program .............................................................................................. 15
4. RAW MATERIALS AND UTILITIES ................................................ 16

4.1. Availability and Source of Raw Materials........................................................... 16

4.2. Annual Requirement and Cost of Raw Materials and Utilities ......................... 16
5. TECHNOLOGY AND ENGINEERING .............................................. 19

5.1. Production Process ................................................................................................ 19

5. 1. 1. Diaper Production Process............................................................................... 19
5.1. 2. Wet Wipes Production Process........................................................................ 22
5.2. Machinery and Equipment ................................................................................... 23
5.3. Civil Engineering Cost .......................................................................................... 24

6. HUMAN RESOURCE AND ORGANIZATIONAL STRUCTURE . 25

6.1. Human Resource.................................................................................................... 25

 6. 1. 1. Training Requirement ...................................................................................... 27
6. 2. Organizational Structure ...................................................................................... 27
6. 2. 1. General Manager ............................................................................................. 30
6. 2. 2. Production And Technical Department ........................................................... 30
6. 2. 3. Finance and Administration Department ......................................................... 31
6. 2. 4. Commercial Department .................................................................................. 32
6. 2. 5. Quality Control And Assurance Department ................................................... 33
7. FINANCIAL ANALYSIS ....................................................................... 34

7.1. Underlying Assumption ........................................................................................ 34

7.2. Implementation Schedule...................................................................................... 35
7. 2. 1. Implementation Cost........................................................................................ 36
7. 3. Office Furniture and Equipment ......................................................................... 38
7. 4. Investment .............................................................................................................. 39
7. 3. Production Costs .................................................................................................... 41
7. 4. Bank Loan Repayment Schedule ......................................................................... 41
7. 5. Financial Evaluation.............................................................................................. 42
7. 5. 1. Profitability ...................................................................................................... 42
7. 5. 2. Payback Period ................................................................................................ 42
7. 5. 3. Internal Rate of Return , IRR and Net Present Value, NPV ............................ 42
7. 6. Economic and Social Benefit and Justification ................................................... 43
7. 6. 1. Profit Generation ............................................................................................. 43
7. 6. 2. Tax Revenue .................................................................................................... 43
7. 6. 3. Employment and Income Generation .............................................................. 43
7. 6. 4. Import Substitution and Foreign Exchange Saving ......................................... 43
7. 6. 5. Environmental and Social Impact Assessment (ESIA) ................................... 44
7. 6. 6. Technology Transfer........................................................................................ 44
7. 6. 7. Diversification And Inter-Sectoral Linkage .................................................... 44
ANNEXES: FINANCIAL ANALYSIS ..................................................... 45

REFERENCES ............................................................................................ 55
 LIST OF TABLES AND FIGURES
List of Tables
TABLE 3. 1 : ETHIOPIA‟S CURRENT INSTALLED AND ATTAINED ANNUAL
CAPACITY OF TEXTILES AND APPAREL ................................................................... 12
TABLE 3. 2: IMPORT OF TEXTILE (IN TON)................................................................ 13
TABLE 3. 3 : EXPORT OF TEXTILE (IN TON) .............................................................. 13
TABLE 3. 4 : PROJECTED DEMAND FOR TEXTILE (IN TON) .................................. 14

TABLE 4. 1 : MATERIAL AND AUXILIARY REQUIREMENT AND COST FOR

DIAPER AT FULL CAPACITY......................................................................................... 17
TABLE 4. 2 : ANNUAL UTILITY REQUIREMENT ....................................................... 18

TABLE 5. 1 : MACHINERY AND EQUIPMENT ............................................................ 23

TABLE 6. 1 : HUMAN RESOURCE REQUIREMENT .................................................... 25

TABLE 7. 1 : CONSTRUCTION AND FINANCE; DEPRECIATION AND WORKING

CAPITAL (MINIMUM DAYS OF COVERAGE) ............................................................. 34
TABLE 7. 2 : IMPLEMENTATION COST ....................................................................... 37
TABLE 7. 3: OFFICE FURNITURE AND EQUIPMENT COST, ETB ........................... 38
TABLE 7. 4 : TOTAL INITIAL INVESTMENT (000 ETB) ............................................. 39
TABLE 7. 5 : PRODUCTION COST (000 ETB) ............................................................... 41
TABLE 7. 6 : BANK LOAN REPAYMENT SCHEDULE (X103 ETB) ........................... 42

List of Figures
FIGURE 6. 1 : ORGANIZATIONAL STRUCTURE OF THE DIAPERS AND WET
WIPES MANUFACTURING INDUSTRY ........................................................................ 29

FIGURE 7. 1 : PROJECT IMPLEMENTATION SCHEDULE ......................................... 35

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 LIST OF ABBREVIATIONS
ADLI : Agricultural Development Led Industrialization
AfDB : African Development Bank
AGOA : African Growth and Opportunity Act
ANRS : Amhara National Regional State
CAGR : Compound Annual Growth Rate
COMESA : Common Market for Eastern and Southern Africa
COMFAR : Computer Module for Financial Analyses and Reporting
CRGE : Climate Resilient Green Economy
CSA : Central Statistical Authority
EEU : Ethiopian Electric Utility
EIC : Ethiopian Investment Commission
EPAs : Economic Partnership Agreements
EIA : Environmental Impact Assessment
ESIA : Environmental and Social Impact Assessment
ERCA : Ethiopian Revenues and Customs Authority
EU : European Union
FDI : Foreign direct investment
FICC : Fixed Income, Credit Currency
FMI : Future Market Insight
GCI : Global Competitiveness Index
GDP : Gross Domestic Product
GTP : Growth and Transformation Plan
ITO : International Trade Organization
IAIP : Integrated Agro-Industrial Parks
IFSR : International Finance Study and Reporting
IDS : Industrial Development Strategy
IMF : International Monetary Fund
IRR : Internal rate of return
m² : Square meter
m3 : Cubic meter
MoE : Ministry of Education
NPV : Net present value
OEC : Observatory of Economic Complexity
OECD : Organization for Economic Cooperation and Development
ONRS : Oromia National Regional State
SNNPRS : Southern Nations, Nationalities and Peoples Regional State
UN : United Nation
UNIDO : United Nation Industrial Development Organization
USD : United States Dollar
WB : World Bank
WEF : World Economic Forum
WTC : World Trade Center
WTO : World Trade Organization

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 1. EXECUTIVE SUMMARY
This project profile deals with the establishment of Diapers and Wet Wipes
Manufacturing Industry at Debre Birhan City Administration, North Shoa Zone in
Amhara National Regional State (ANRS). The following presents the main findings of
the study.

A diaper and wipes are a type of garment and textile that is designed to be worn by
infants and young children who are not yet toilet trained. Diapers and wet wipes are
sanitary materials used in sanitation of the skins to prevent skin irritation or disorders
found in infancy. The diapers and wet wipes are manufactured with different sizes to
address different ages of the babies and other societies. The products are very important
for sanitation of the residential family, hospital and others.

Ethiopia is one of the strategic sites for garment and textile industry related to diapers
and wipes manufacturing and export to the international market. The supply of diapers
and wet wipes was increasing in the last decades at Ethiopia due to the expansion and
development of polyester, fashion industry, population, and modernization. Demand
projection divulges that the domestic demand for diapers and wet wipes is substantial
and is increasing with time at local and international market. Accordingly, the planned
plant is set to produce 100. 00 tons of diapers and 100. 00 tons of wet wipes annually
and export 65% of it to the global market.

The principal raw material required for wet wipes is nonwoven fabrics (20% Viscose
and 80% polyester). In addition to water, methylisothiazolinone preservatives and
wrapping paper are used as raw materials in small amount. The auxiliary materials in
wipes production are glue and polyethylene film. The auxiliary materials are packaging
to wrap-up products. Most of the raw materials aren‟t locally available except glue and
wrapping paper.

The principal raw materials required for diaper are absorbent pad (pulp), adhesives
tapes and elastic, polypropylene and polyethylene, and non-woven fabric (sodium

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polyacrylate resin). Plastic resin (non-woven fabric) (sodium polyacrylate) is an
excellent absorbent to increase the quality of the wet wipes. Thread and ink are also
materials for proper production of diapers. The auxiliary material in diapers production
is polyethylene film. The auxiliary materials are packaging to wrap-up products. Most
of the raw materials are locally available except pulp.

The total investment cost of the project including working capital is estimated at ETB
100. 00 million at 15,000 square meter of land and creates 154 jobs and ETB 17. 73
million of income for the low-income community in Ethiopia per year.

The financial result indicates that the diapers and wet wipes production project will
generate profit beginning from the first year of operation. Moreover, the project will
payback fully the initial investment less working capital in 4 years and 6 months. The
result further shows that the calculated IRR of the project is 16. 51% and NPV
discounted at 12% of ETB 18. 64 million .

The establishment of such diapers and wet wipes industry will have a foreign exchange
saving effect to the country by substituting the current imports and export huge
products to the world. The project will also create backward linkage with garment and
textile industry, dye production, polyester, clothes, and packaging sub-sector and
forward linkage with the fashion, sanitation, health, hospital and other manufacturing
sub sectors. The industry can be a technology transfer center after working with
research centers and universities. The project also generates income for the
Government in terms of tax revenue and payroll tax.

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 2. PRODUCT DESCRIPTION AND
APPLICATION
A diaper and wipes are a type of garment and textile that is designed to be worn by
infants and young children who are not yet toilet trained. Diapers and wet wipes are
sanitary materials used in sanitation of the skins to prevent skin irritation or disorders
found in infancy. The diapers and wet wipes are manufactured with different sizes to
address different ages of the babies and other societies. The products are very important
for sanitation of the residential family, hospital and others.
1. Diapers
Diapers are one of the common fiber-based materials processing product. A diaper is
important for day to day activities of the human beings especially for children at infant
stage.
2. Wet wipes
Wet wipes is a piece of soft paper used for sponging the body of the babies in the
diaper region (commonly referred as diaper dermatitis) to prevent overhydration and
prolonged exposure to urine and feces. The product has also considerable demand by at
infancy stages of the child. Wet wipes can serve a number of personal and household
purposes. Although marketed primarily for wiping infants' bottoms in diaper changing,
it is not uncommon for consumers to also use the product to clean floors, toilet seats,
and other surfaces around the home. Parents also use wet wipes, or as they are called
for baby care, baby wipes, for wiping up baby vomit and to clean babies' hands and
faces.

Diapers and Wet wipes are materials that made from paper and clothes . Diapers and
Wet wipes industry is used in various industries like fashion industry, garment and
textile industry, hospital, residential family, and other related services.

Manufacturing process involved include weaving, dyeing, and finishing with the state-
of-art-technology. The project has backward linkage with garment and textile industry,
and forward linkage with product health, hospital, residential family, and fashion
industries.

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3. MARKET STUDY, PLANT CAPACITY AND
PRODUCTION PROGRAM
3. 1. Market Study
3. 1. 1. Present Demand And Supply
The population of the world is ever growing and almost reaching seven billion at this
point in time. Besides this, the economy of majority of the world population is also
seen increasing from time to time. This was due to the economic policy improvements
adopted by most part of the world continents like Africa, East and Middle Asia, and
South America to increase the prosperity of their people. And it is obvious that the
more improved the economic welfare of people, the more they expend on purchase
power of apparel. Therefore, as long as the people‟s expending capacity continues
improving parallel with population growth, it makes this time the most strategic for
textile industries.

A diaper and wipes industry data are in line with the data‟s of the textile industry.
Therefore the data‟s of the textile industry at national and internationals level can affect
the business of the a diaper and wipes business.

World textile commodity trade grew by 2. 9% in quantity in 2018, but fell by 0. 1% in

2019 due to trade wars and slowing economic growth. On the other hand, world trade
volume, on value basis, has decreased by 2. 9% in 2019 compared to the previous year
to 38. 1 trillion USD and in this period, global exports were calculated to be 18. 9
trillion US Dollars while imports were calculated to be 19. 2 trillion US Dollars (WB,
2019). China was the leader with 106 billion Euros in overall textile exports on 2020,
followed by 28 EU member countries with 66 billion Euros and India with 16 billion
Euros.

Since the return to a market economy in 1991, the Government of Ethiopia has
identified the Textile and Clothing sector as a priority for poverty reduction and
economic development, given its labor intensity. From 2000 onward, the Government

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began to privatize state cotton farms and ginneries and to sell or lease state textile mills.
However, it is only in the last few years that the sector has truly started to grow
according to its potential.

As production costs in Asia continue to rise and Western buyers become more
interested in ensuring ethical working conditions, a number of sourcing companies
have turned away from Asia and towards Africa. Brands including H&M, Tesco and
Primark have all begun to source from Ethiopia over the last few years as they seek to
increase control of the entire supply chain from cotton to garment. They are drawn not
only by low labour costs but also by the availability of raw materials and by the
geographical proximity; Europe can be reached easily via the Suez Canal, reducing
delivery times by a third when compared with the Far East. In addition, many
companies are drawn to the perceived social responsibility of the sector in Ethiopia;
Ethiopian labour laws conform to International Labour Organization standards. 9
Nowhere is Ethiopia‟s potential more evident than in trade statistics since the turn of
the century. Over the last decade, Textile and Clothing exports have grown by a CAGR
of 26 %, reaching US $ 82 million in 2014. During the same period, Textile and
Clothing subsector exports grew by CAGRs of 37 % and 19 % respectively (ITC,
2020).

Almost all Ethiopian wear traditional clothes- such as netela, gabi, kutta, buluko and
others- made from cotton textile by traditional weavers using traditional or semi-
modern weaving machines. Besides, Ethiopian wear traditional dresses (Ye Habesha
Libse) woven by traditional weavers made from cotton yarn. Such demand for cotton
textile in Ethiopia is met mainly from local suppliers who spin cotton manually in a
very small scale at a household level. Moreover, currently, large numbers of newly
emerging cottage industries (which are working on diversifying, upgrading and
modernizing Ethiopian traditional costumes) are demanding large amount of textile as
their major input. These fashion industries are being supplied by the existing textile
factories. The gap between the demand for textile and the domestic supply is filled by
local production and imports; particularly in the recent year there is a huge surge in the
cotton textile imports. The industry has a huge export potential in case of Ethiopia.
Unless there additional textile plants will be established in the country the export and
import growth seems to continue in the future.

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Ethiopia‟s textile industry is relatively diverse and can be divided broadly into four
main areas of production: spinning, knitting and weaving, finishing and garmenting.
The Ethiopian textile industry produces a wide range of products, such as yarn, grey
knitted and woven fabric, finished fabrics and made-ups.

The installed capacity of each section of the sector is 72 million kilograms of yarn, 122
million meters of woven fabric, 30 million kilograms of knitted fabric, 18 million
kilograms of processed knitted fabric, 49 million meters of finished woven fabric, 62
million pieces of knitted garments and 18 million pieces of woven garments.

TABLE 3. 1 : ETHIOPIA‟S CURRENT INSTALLED AND ATTAINED ANNUAL

CAPACITY OF TEXTILES AND APPAREL
Sr. Section Installed Annual Attained Annual Utilization
No. Capacity Capacity of Capacity
1 Ginning 106,164 Tons Of Lint 37,300 Tons Of Lint 35%
Cotton Cotton
2 Spinning 72 million Kg Of Yarn 50. 4 million Kg Of Yarn 70%
3 Weaving 122 million Meters Of 61 million Meters Of 50%
Woven Fabric Woven Fabric
4 Knitting 30 million Kg Of Knitted 13. 5 million Kg Of 45%
Fabric Knitted Fabric
5 Knitting 18 million Kg Of 8. 64 million Kg Of 48%
Processi Processed Knitted Fabric Processed Knitted Fabric
ng
Source: ACTIF Benchmarking reports, 2016

Available demand data show that there is ample demand for textile in the country. As
seen in Table 3. 1, the current domestic production of Ethiopia is more than 22,140. 00
tons textile per year. As the data of ERCA shows that the average value of export and
import of textile are 5,181. 63 tons (See Table 3. 3) and 13,000. 93 tons (See Table 3. 2
) in the last few years. Thus, it is assumed that most of Textile Manufacturing Industry
that exist in Ethiopia have no potential to cover domestic market as seen in Table 3. 2.
Additionally, there is a potential of export of the textile to many nations as is presented
in Table 3. 3 below.

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TABLE 3. 2: IMPORT OF TEXTILE (IN TON)
Import Growth Rate, %
Year
2015 51,180. 38 (60. 78)
2016 20,074. 90 (97. 49)
2017 503. 08 1,133. 50
2018 6,205. 44 (99. 33)
2019 41. 58 (99. 47)
2020 0. 22 (60. 78)
Average 13,000. 93 112. 74

TABLE 3. 3 : EXPORT OF TEXTILE (IN TON)

Year Export Growth Rate, %
2015 3,224. 18
2016 3,954. 24 22. 64
2017 4,314. 46 9. 11
2018 (3. 55)
4,161. 38
2019 49. 24
6,210. 24
2020 14. 14
7,088. 57
2021 3. 24
7,318. 31
Average 5,181. 63 13. 55
Source: ERCA, 2023

The above table shows that the average annual demand for textile is growing in that
derived from domestic production and decreasing that derived from import from
abroad. For the six years under consideration (2015 to 2021), the textile industries have
a gap to cover the market. Although the trend of import exhibited ups and down
movements initially, it continuously slow in the last few years. This is likely related to
the growth in production goods in the industrial and agricultural sector. However, the
trend of export exhibited ups and down movements initially, it continuously grow
progressively in the last few years.

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3. 1. 2. Projected Demand
Most of the textile industries are found in big cities of Ethiopia especially at Addis
Ababa, ONRS, and ANRS. The demand for textile is directly depends on the growth of
population in the world. As the last five years the growth of population in the world is
1. 00% (Worldometer, 2023). With more expected investment in the industrial sector in
the future, the demand for textile will also grow considerably. However, if we
conservatively assume that demand continues to grow only by 1. 00%, we obtain the
following forecast result (Table 3. 4). The present demand is reached to 22,585. 01 tons
at 2024.

TABLE 3. 4 : PROJECTED DEMAND FOR TEXTILE (IN TON)

Year Projected Demand
2024 22,585. 01
2025 22,810. 86
2026 23,038. 97
2027 23,269. 36
2028 23,502. 06
2029 23,737. 08
2030 23,974. 45
2031 24,214. 19
2032 24,456. 33
2033 24,700. 90

The result points out that the overall demand for textile will substantially grow in the
future. For example, by 2033, demand will reach 24,700. 90 tons. Thus, the result
obtained with conservative assumption asserts that there is attractive demand for
textile.

3. 1. 3. Pricing and Distribution

In 2023, producers‟ price of domestic production of diapers and wet wipes has been on
average ETB 600. 00-700. 00 per kg while it was ETB 800. 00 -900. 00 per kg for the
imported item. In view of this and also based on the market research result and the
capacity of the envisaged plant, the selling price of diapers and wet wipes has been
estimated at ETB 500. 00 per kg.

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This product is selected to attract various target industries. The plant can also produce
other diapers and wet wipes on demand. The target customers are families, hospitals,
and suppliers to fashion industry. The available retail and wholesale network shall be
used by the envisaged plant.

Most of the diapers and wet wipes product will exported to EU, USA, Middle East and
Asian nations. The company will export 65% of the diapers and wet wipes product to
the world market. The remaining 35% of the product will present to the domestic
market.

3. 2. Plant Capacity
Considering the expected demand for diapers and wet wipes as presented earlier, and
the planned technology, the envisaged plant is set to annually produce 100. 00 tons of
diapers and 100. 00 tons of wet wipes per year.

3. 3. Production Program
The program is scheduled based on the consideration that the envisaged plant will work
300 days in a year in 1 shift 8 hours, where the remaining days will be holidays and for
maintenance. During the first year of operation the plant will operate at 70% capacity,
growing to 80% and 90% in the 2nd and 3rd year respectively. The capacity will grow to
100% starting from the 4th year. This consideration is developed based on the
assumption that market and logistics barriers would take place for the first three years
of operation.

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 4. RAW MATERIALS AND UTILITIES
4. 1. Availability and Source of Raw Materials
The principal raw material required for wet wipes is nonwoven fabrics (20% Viscose
and 80% polyester). In addition to water, methylisothiazolinone preservatives and
wrapping paper (45 gm/m2) are used as raw materials in small amount as seen in Table
4. 1. The auxiliary materials in wipes production are glue and polyethylene film. The
auxiliary materials are packaging to wrap-up products. Most of the raw materials aren‟t
locally available except glue and wrapping paper.

The principal raw materials required for diaper are absorbent pad (pulp), adhesives
tapes and elastic, polypropylene and polyethylene, and non-woven fabric (sodium
polyacrylate resin). Plastic resin (non-woven fabric) (sodium polyacrylate) is an
excellent absorbent to increase the quality of the wet wipes. Thread and ink are also
materials for proper production of diapers as seen in Table 4. 1. The auxiliary material
in diapers production is polyethylene film. The auxiliary materials are packaging to
wrap-up products. Most of the raw materials are locally available except pulp.

The major raw materials and auxiliaries required for the production of sanitary diapers
and wet wipes are shown in Table 4. 1 below.

4. 2. Annual Requirement and Cost of Raw Materials

and Utilities
The annual raw material and utility requirement and the associated cost for the
envisaged plant are listed in Table 4. 1 and 4. 2 here under.

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TABLE 4. 1 : MATERIAL AND AUXILIARY REQUIREMENT AND COST FOR
DIAPER AT FULL CAPACITY
Unit Local Foreign Total
Cost Per Cost in Cost in Cost per
Raw Material and Quantit Unit in 000 000 ETB Year in
Inputs y ETB ETB 000 ETB
WET WIPES
Raw Materials
Nonwoven Fabrics
(20% Viscose And 148,500. 14,887. 14,887.
80% Polyester) Ton 100. 25 00 22 22
1,150. 126.
Water Kg 00 110. 00 50 126. 50
Wrapping Paper (45
gm/m2) Kg 355. 00 165. 00 58. 58 58. 58
Methylisothiazolinon
e Preservatives Kg 102. 30 385. 00 39. 39 39. 39
Auxiliary Material
1,210. 866.
Glue kg 716. 11 00 50 866. 50
Polyethylene Film LS 2,475. 70 2,475. 70
DIAPERS
68,750. 4,125.
Absorbent Pad (Pulp) Ton 60. 00 00 00 4,125. 00
Plastic Resin (Non-
Woven Fabric)
(Sodium 168,850.
Polyacrylate) Ton 16. 00 00 2,701. 60 2,701. 60
Thread Kg 15. 00 165. 00 2. 48 2. 48
Adhesives Tapes And 1,100.
Elastic Ton 10. 00 00 11. 00 11. 00
Polypropylene And 94,050.
Polyethylene Ton 15. 00 00 1,410. 75 1,410. 75
Ink Kg 1. 00 110. 00 0. 11 0. 11
Auxiliary Material
1,580. 56
Polyethylene Film LS 1,580. 56
28,285.
Total Cost 38

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The total cost of raw materials at full capacity of production is estimated to be ETB 28.
29 million per year. Furthermore, the production requires electricity, water, fuel oil and
lubricant oil for the smooth process. The cost of utilities item are detailed in the
following Table 4. 2. The total cost related to utilities are ETB of 1. 10 million per year.

Energy and water are important in diapers and wet wipes production. The total running
cost for raw materials and utilities reaches to ETB 29. 39 million per year.

TABLE 4. 2 : ANNUAL UTILITY REQUIREMENT

Quantity Price Per Unit Local Cost in Total Cost in
Utility Unit in ETB 000 ETB 000 ETB
Electricity kWh 29,600. 00 3. 40 100. 64 100. 64
Furnace Oil Kg 12,500. 00 77. 00 962. 50 962. 50
Lubricant
Kg 12. 00 550. 00 6. 60 6. 60
Oil
Water m3 50. 00 10. 00 0. 50 0. 50
ITC 33. 00 33. 00
Total Cost 1,103. 24 1,103. 24

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 5. TECHNOLOGY AND ENGINEERING
5. 1. Production Process
The envisaged plant is set to produce diapers and wet wipes as sanitary materials. The
production processes are different in diapers and wet wipes production as the raw
materials are different.

5. 1. 1. Diaper Production Process

The manufacturing process of baby diaper is a unit comprises a paper pulp crushing
machine, forming (wrapping) machine, glue spreading machine and the conveyer
systems, plus counter, control box, and alignment machine.

The raw materials used to make diapers are generally composed of a combination of
materials such as non-woven fabrics, pulp, plastic films, elastics, and adhesives. The
non-woven fabrics are made from a mix of synthetic fibers, such as polypropylene and
polyethylene, and are used to provide the diaper with its shape, strength, and
absorbency. The pulp is usually composed of wood pulp, and is used to provide the
diaper with its absorbent core. The plastic films are used to provide a waterproof barrier
to prevent liquids from leaking out of the diaper. Elastics are used to provide a snug fit
for the diaper, and adhesives are used to provide an extra secure fit. Sodium
polyacrylate is an excellent material due to its remarkable absorbent properties. This
polymer-based material, which is made up of sodium and poly acrylic acid, can absorb
hundreds of times its own weight in water. It is a highly valued ingredient in the
manufacture of diapers and other absorbent products due to its properties. Polyacrylate
reacts with water to form a gel, which is even more remarkable. This gel-like substance
forms as it rises in the cup, and it is exactly what happens when you put a disposable
diaper in your mouth. Polyacrylate absorbs and transforms into a gel, which acts as a
moisture barrier and helps to keep moisture away from sensitive skin. This is why
disposable diapers are so effective in keeping babies dry.

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Step 1: Formation of the absorption pad
The absorbent pad is formed on a movable conveyor belt that passes through a long
“forming chamber”. At various locations in this chamber, pressurized nozzles spray
polymer particles or fiber material onto the surface of the conveyor belt. The bottom of
the conveyor belt is perforated, and as the mat material is sprayed onto the belt, a
vacuum is applied from below, causing the fibers to be pulled down to form a flat mat.

At least two methods have been used to incorporate the absorbent polymer into the mat.
In one method, the polymer is injected into the same feedstock that provides the fibers.
This method produces a mat that is uniformly dispersed with the absorbent polymer
throughout its length, width and thickness. The problem associated with this method is
that loss of absorbent may occur as fine particles are pulled through the pores of the
conveyor belt by vacuum. As a result, this method is both expensive and messy. This
method also results in uneven absorption of the mat, as the absorbent is lost from only
one side and not the other.

The second method of applying polymers and fibers is to apply the absorbent material
to the top surface of the mat after the mat has been molded. This method produces a
mat where the absorbent material is concentrated on its top surface and there is not
much absorption over the entire mat. Another disadvantage is that mats made by this
method may lose some of the polymer applied to its surface. In addition, this method
tends to cause gel blockage because all of the absorbent is on the outside of the mat.
Moisture is trapped in this outer layer and has no chance to spread to the center. This
blockage keeps the moisture close to the skin and can lead to discomfort for the wearer.

These problems are solved by a controlled blend of polymer and fiber materials.
Multiple sprayers are used to apply several layers of polymer and fiber. As the fibers
are pulled into the cavity and form the bottom of the pad, a portion of the polymer is
added to the mixture, forming a combined layer of polymer and fiber. More pure fibers
are then pulled on top, creating a sandwich effect. The mat thus formed has the
absorbent polymer confined to its center and surrounded by the fiber material. Gel
clogging is not a problem, as the polymer is concentrated in the core of the mat. It also
solves the problem of particle loss because all the absorbent is surrounded by the

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fibrous material. Finally, this process is more cost effective because it distributes the
polymer where it is needed.

After the pad has received its full dose of fibers and polymer, it advances along the path
of the conveyor belt to a leveling roller near the exit of the forming chamber. This
roller removes some of the fibers from the top of the mat to make it uniform in
thickness. The pad is then moved by the conveyor belt through the exit for subsequent
operations to form the competing diapers.

Step 2: Preparation of nonwoven fabrics

Nonwoven sheets are formed from plastic resins using a meltblown process as
described above. These sheets are produced in a wide roll called a “web” and then cut
to the appropriate width for use in diapers. One web is used for the top ply and the
other for the bottom ply. It should be noted that this step is not necessarily performed
sequentially after the pads are formed, as the nonwoven is usually manufactured in a
separate location. When the manufacturer is ready to start producing the diapers, these
large pieces of fabric are attached to special roller equipment that transports the fabric
to the assembly line.

At some point in the production process, stretched elastic bands are attached to the
backing with adhesive. After the diapers are assembled, these elastic bands shrink and
gather the diapers together to ensure a tight fit and limit leakage.

Step 3: Assembly of the components

In this process, there are still three separate components, the absorbent pad, the top
panel, and the back panel. These three components are long strips that must be joined
together and cut into diaper-sized units. This is done by feeding the absorbent pad onto
a conveyor belt along with the polyethylene backing sheet. The polypropylene top sheet
is then fed into place and the prepared sheets are joined together by gluing and heating
or ultrasonic welding. The assembled diapers may have other accessories, such as tape
or Velcro that acts as a closure.

The long rolls are then cut into individual diapers, folded, and packaged for shipping.

21
5. 1. 2. Wet Wipes Production Process

Wet wipes are usually manufactured from a mixture of synthetic fibers and a solution
including water and additional substances for moisturizing, cleansing, and disinfection.
The fibers are first woven into a sheet, which is then divided into smaller pieces and
immersed in the solution. The sheets are then kept in airtight containers to maintain
their moisture until they are utilized.

A wet wipes production line typically consists of several key pieces of the process,
including a RO water purification process, a lotion preparation process, a wet wipes
converting and packaging process, a wet wipes lid application process, a wet wipes
secondary packaging process, and an end-of-line packaging process.
Step 1: RO Water Purification Process.

Generally, wet wipes contain up to 99% water. Wet wipes should be made using water
that is either highly purified or reverse osmosis standard. Reverse osmosis (RO) is a
water purification process that involves forcing water through a semi-permeable
membrane to eliminate impurities and contaminants. In the context of wet wipes
production, RO water purification may be used to purify the water that is used in the
liquid solution that is used to saturate the wipes.

The RO process usually consists of the following steps:

1. Pre-treatment: Chemicals are used to clean the water of any big pollutants or
particles that can affect the RO membrane.
2. Filtration: Water is filtered through several filters to get rid of any pollutants or
leftover particles.
3. RO: Water is forced across a membrane that is semi-permeable and enables
water molecules to flow over but stops big impurities and contaminants.
4. Post-treatment: Chemicals are used to regulate the pH and get rid of any
contaminants still present in the purified water.
Step 2: Lotion Preparation Process

Wet wipes are a kind of pre-moistened cloth that may be applied to the skin to clean,
refresh, or moisturize it. The following stages are usually included in the process of
producing wet wipes with lotion:

22
 1. In a large mixing tank, combine the ingredients for the lotion or cleaning
solution. Water, glycerin, or other moisturizing ingredients are often included in
this, along with any additional required ingredients like fragrances or
preservatives.
2. Dip the wipes into the lotion or cleansing solution, making sure they are
completely saturated.
3. Squeeze out any excess liquid from the wipes and spread them out on a flat
surface to dry.
4. The wipes may be divided into individual wipes and packed for usage after they
have dried.
Step 3: Wet Wipes Converting and Packaging Process

The following steps are commonly included in the wet wipes converting and packaging
process:

1. On a rolling conveyor belt, the wet wipes are loaded and fed through a machine
that divides them into individual wipes and shapes them as required (e. g. ,
rectangular, square, or round).
2. Once inside a packaging machine, the folded wipes are sealed within a package
or container using heat sealing or another technique.
3. After quality-checking, the wipes are packaged and placed into bigger boxes or
cases for delivery.

5. 2. Machinery and Equipment

The machineries and equipment required for producing diapers and wet wipes is
detailed in Table 5. 1 below.

TABLE 5. 1 : MACHINERY AND EQUIPMENT

SR. NO. DESCRIPTION QUANTITY
DIAPERS PRODUCTION PROCESS
1 Crushing Machine 1
2 Forming (Wrapping) Machine, 1
3 Glue Spreading Machine 1
4 Packing Machine 1

23
 WET WIPES PRODUCTION PROCESS
1 RO water purification machine 1
2 Lotion Preparation Machine 1
3 Wet Wipes Converting Machine 1
4 Packaging Machine 1

The total cost of machinery and equipment including freight, insurance and bank cost is
estimated to be about ETB 40. 91 million .

The following are some of the machineries suppliers‟ address for the envisaged project
1. Diaper Production Machine,
Quanzhou Ruoxin Machinery Co. , Ltd
5th Jinyuan Road, Wuli Industrial Zone,Jinjiang,Fujian Province,China
Tel: 0086-595-8761 9521
Mob: 0086-150 6095 9606
E-mail:admin@ycmachine. com. cn
Website: www. rxhygiene. com
2. Wet Wipes Production Machine
Wenzhou Ruirun Machinery Co. , Ltd
Tel:+86-577-58910005
Fax:+86-577-58910308
Mob: +8613566181562
Email: brianlin@cnruirun. com,brianlin71@yahoo. com
Yunzhou Industrial Zone, Yunzhou Street, Ruian City, Zhejiang Province, China

5. 3. Civil Engineering Cost

The total site area for the envisaged plant is estimated to be 15,000 m2. The major
buildings and civil works include buildings for production, offices, workshops and
warehouses. Total cost of building and other civil works is estimated at ETB 31. 36
million including 5% contingencies.

24
 6. HUMAN RESOURCE AND
ORGANIZATIONAL STRUCTURE
6. 1. Human Resource
The list of required manpower for the envisaged plant is stated in Table 6. 1 below. The
envisaged plant therefore, creates 154 jobs and about ETB 17. 73 million of income.
The professionals and support staffs for the envisaged plant shall be recruited from the
surrounding region of the Debre Birhan City.

TABLE 6. 1 : HUMAN RESOURCE REQUIREMENT

Monthly Annual Salary (In

Sr. No. Position No.
Salary (ETB) 000 ETB)
1 Overhead Labour
1. 1 General Manager Office

1. 1. 1 General Manager 1 25,000. 00 300. 00

1. 1. 2 Executive Secretary 1 15,000. 00 180. 00
Sub-Total 2 480. 00
Finance And Administration
1. 2
Department
1. 2. 1 Department Head 1 15,000. 00 180. 00
1. 2. 2 Senior Accountant 2 12,000. 00 288. 00
1. 2. 3 Junior Accountant 4 7,500. 00 360. 00
1. 2. 4 Senior Cost Accountant 3 10,000. 00 360. 00
1. 2. 5 Personnel 4 7,000. 00 336. 00
1. 2. 6 General Service 5 7,000. 00 420. 00
1. 2. 7 Driver 3 14,000. 00 504. 00
1. 2. 8 Security Head 1 10,000. 00 120. 00
1. 2. 9 Guard 6 7,000. 00 504. 00
1. 2. 10 Janitors 17 6,000. 00 1,224. 00
1. 2. 11 Gardner 5 6,000. 00 360. 00
Sub Total 51 4,656. 00

25
1. 4 Commercial Department
1. 4. 1 Department Head 1 15,000. 00 180. 00
1. 4. 2 Purchaser 5 10,000. 00 600. 00
1. 4. 3 Salesperson 7 10,000. 00 840. 00
1. 4. 4 Storekeeper 2 7,000. 00 168. 00
1. 4. 5 Assistant Store Keeper 3 6,000. 00 216. 00
Sub Total 18 2,004. 00
Total 71 7,140. 00
Employee‟s Benefit And
Expense (20% Of Basic
Salary) 1,428. 00
Total Overhead Labor 71 8,568. 00
2 Direct Labour
Production And Technical
2. 1
Department
Department
2. 1. 1 Head/Specialized In Food 1 15,000. 00 180. 00
Science
2. 1. 2 Production Supervisors 1 13,000. 00 156. 00
Diapers And Wet Wipes
2. 1. 3 6 9,000. 00 648. 00
Processing
Diapers and Wet wipes
2. 1. 4 7 8,000. 00 672. 00
Expert
2. 1. 5 Assistant Operators 33 7,000. 00 2,772. 00
2. 1. 6 Operators 20 6,000. 00 1,440. 00
2. 1. 7 Mechanic 5 10,000. 00 600. 00
2. 1. 8 Electrician 5 10,000. 00 600. 00
Sub Total 78 7,068. 00
Quality Control And
2. 2
Assurance Service
Service Head Specialized In
2. 2. 1 Diapers And Wet Wipes 1 15,000. 00 180. 00
Science/Engineering
Quality Controller
2. 2. 2 2 8,000. 00 192. 00
Technologist
2. 2. 3 Laboratory Technician 2 8,000. 00 192. 00
Sub-Total 5 564. 00
Employee‟s Benefit And
Expense (20% Of Basic
Salary) 1,526. 40

26
 Total Direct Labour Cost 83 - 9,158. 40
Grand Total Cost 154 - 17,726. 40

6. 1. 1. Training Requirement
Training of key personnel is very essential and shall be conducted in collaboration with
the suppliers of the plant machineries. The training should primarily focus on the
production technology and machinery maintenance and trouble shooting. It is
suggested, to train production and technical manager, production and technical head,
and quality control head, mechanics, electricians and operators on-the-job training at
the actual site on the actual working condition by competent expert of the machinery
and technology supplier for about one month during erection and commissioning
period.

6. 2. Organizational Structure
There are numerous reasons why having an organizational structure is key for a diapers
and wet wipes processing business:
 Provides a management planning tool: An organizational structure can help a company
plan more strategically for the future so it can meet its goals. It can help determine the
hiring process and how it plans to expand in the future.
 Improves decision-making: It creates a company-wide understanding of how
information flows throughout the business, whether it's from executives to manager to
employee or employee to employee.
 Helps employee engagement: Having an organizational structure gives each employee
a specific role within the company. It can help employees understand how their work
fits with the company's vision and may enable more effective teamwork and
management expectations.
 Provides a visual: Many companies that use an organizational structure create a chart
that they can use as an employee.
The company organizational structure shall consist of the following five departments
related to Diapers and Wet Wipes Manufacturing Industry:
 General Manager Department,
 Production and Technical Department,
 Finance and Administration Department,

27
 Commercial Department, and
 Quality Control And Assurance Department.
The organizational structure of the industry is shown in Figure 6. 1.

28
FIGURE 6. 1 : ORGANIZATIONAL STRUCTURE OF THE DIAPERS AND WET WIPES MANUFACTURING INDUSTRY

GENERAL MANAGER

QUALITY CONTROL DEPARTMENT

ADMINISTRATION AND PRODUCTION AND TECHNICAL COMMERCIAL

FINANCE DEPARTMENT DEPARTMENT DEPARTMENT

Finance Division Production Division Procurement and Stores

Division
Personnel and General Service Technical Division
Division Market Research and Sales
Division

29
 Functional description of each of the above units is as summarized below.

6. 2. 1. General Manager
The General Manager1 discharges all the duties and responsibilities vested on him the
managing director. Besides strategic and policy directing role, the General Manager is
in charge of the following main duties and responsibilities.
 Develops strategic and operational plans and organizes, administers and controls the
overall operation of the plant in line with Company policy,
 Manages the day to day affairs of the plant,
 Represents the plant before courts of law and all other parties, and delegates his power
as may be necessary,
 Draws, signs, endorses, accepts and negotiates any commercial documents in
accordance with the internal regulations of the industry,
 Authorizes expenditures, sign checques and authorize signatories on checques as
appropriate,
 Ensures the accomplishment of the enterprise objectives, plans and policies set,
 Issues policy guidelines to the various managerial staff, and
 Chairs management and other higher committee meetings of the industry.

6. 2. 2. Production And Technical Department

The major duties and responsibilities to be performed by the Production and Technical
Department include:
1. Planning, organizing, directing, coordinating and supervising the production and
technical operations of the plant;
2. Ensures that the necessary manpower, equipment and facilities that are organized for
industry and maintenance operations;
3. Assess the requirements in relation to production capacity and performance, manpower
availability and materials supply;
4. Sets industry processing and performance targets in consultation with top management;
5. Ensures that the required type, quality and quantity of raw materials are available to
maintain continuous and optimum level of operation;

1 The General Manager of the company has to have at least Bachelor Degree in Textile
or Mechanical Engineering or Related field

30
6. Ensures that plant plan and program, records etc are properly maintained for future
reference;
7. Studies equipment developments and improved plant techniques;
8. Devises inspection program to control quality and develops plant reporting procedures;
9. Ensures that all equipment and machinery are operated and maintained in accordance
with the required standards;
10. Develops and recommends equipment management system for efficient operation,
usage maintenance and replacement of equipment and machinery
11. Assists management in establishing criteria, policies and procedures for replacement,
disposal or obsolesce of equipment and vehicles
12. To carry out the above activities, the Production and Technical Department will have
two functional divisions, namely
13. Production Division, and
14. Technical Service Division

6. 2. 3. Finance and Administration Department

The major duties and responsibilities to be performed by the Finance and
Administration Department include:
 Plans, directs, coordinates, organizes and controls the overall activities of personnel,
man power planning and development, health and safety and general service activities;
 Ensures that personnel policies, regulations and procedures of the company are
compiled;
 Develops an efficient human resource planning and development system and on
approval, ensures its implementation;
In consultation with concerned departments, performs personnel actions such as
recruitment, placement, promotions; and demotions;
 Ensures that maintenance of vehicles are properly carried out;
 Provides efficient office services in the areas of communications (telephone), transport,
safety protections, and cleanliness;
 Makes sure that, the properties of the plant are identified, well protected, safely handled
and guarded;

31
 Makes sure that each personnel file is up-to-date and well documented with the
pertinent information. Handles also the general archives and records management
system;
 Ensures that the plant has modern accounting and costing systems and fiscal policies
and procedures; also ensures their implementation;
 Keeps up-to-date and reliable accounting and cost records;
 Coordinates the preparation of annual budgets and controls its allocations and
utilizations;
 Checks and ensures the regularity and authority of requests for payment and effects
disbursements;
 Sends bills and statement of accounts to clients and ensures their prompt payment;
 Receives cash and deposits daily collections intact in the plant‟s Bank Accounts;
 Ensures timely reconciliation of bank accounts, creditors, debtors and other accounts;
 Effectively manages the working capital of the company and with the approval of the
Board of Directors and/or Management, arranges short and long-term bank credits; and
 Prepares and issues daily, monthly and annual financial reports.
The Finance and Administration Department is internally structured comprising
divisions including:
 Finance Division and
15. Personnel and General Service Division.

6. 2. 4. Commercial Department
The major duties and responsibilities to be performed by the Procurement and
Marketing Department include:
 Plans, organizes directs, coordinates and controls the overall activities of the domestic
and foreign sales and purchase and the store and property administration;
 Develops systems and procedures necessary for the efficient and effective operation of
the sales, purchasing and storage functions of the plant;
 Promotes the business of the company through sales campaigns and advertisements;
 Identifies suitable supply markets for local and foreign purchases on the basis of
established systems and procedures and bargains prices; ascertains the delivery of
supplies on time;
 Ensures that all supplies purchased are of the required type, quality and standards;

32
 Initiates and prepares operational directives and guidelines governing procurement,
sales and store and property administration of the company;
 Ensures that all materials (raw materials, spare parts, office supplies and finished
products) are properly received and kept in stores as per established rules and
regulations; and
 Exercises inventory control and materials programming that ensures an effective
materials management system
The Procurement and Marketing Department is internally structured comprising
division including:
1. Procurement division and
2. Market research and sales division

6. 2. 5. Quality Control And Assurance Department

The major duties and responsibilities to be performed by the Quality Control and
Assurance include:
 Select easy quality control and assurance methods for diapers and wet wipes production
process,
 Responsible to prepare environmental management plan per year,
 Develops a standard of the raw materials for diapers and wet wipes processing and over
all activities in written document to other department,
 States the quality of the inputs and outputs of the systems of diapers and wet wipes
processing,
 Branding the quality of its products for local and global customers with the state-of-art-
technology, and
 Training the staff of the plant in consideration of global standard related to diapers and
wet wipes processing.

33
 7. FINANCIAL ANALYSIS
7. 1. Underlying Assumption
The financial analysis of Diapers and Wet Wipes Manufacturing Industry is based on
the data provided in the preceding sections and the following assumptions as seen in
Table 7. 1-7. 3.

TABLE 7. 1 : CONSTRUCTION AND FINANCE; DEPRECIATION AND

WORKING CAPITAL (MINIMUM DAYS OF COVERAGE)
Construction And Finance Unity Value
Construction Period year 1
Tax Holidays year 2
Source Of Finance (Equity) % 30%
Source Of Finance (Loan) % 70%

Bank Interest Rate % 11. 5%

Discount For Cash Flow % 12%

Depreciation Unity Value
Building % 5%
Machinery And Equipment % 10%
Office Furniture % 10%
Vehicles % 15%
Working Capital Unity Value
Raw Material Local day 20
Raw Material Foreign day 100
Spare Parts In Stock And Maintenance day 60
Factory Supplies in Stock day 50
Cash In Hand day 10
Accounts Payable day 30
Work in progress day 2
Finished products day 30
Accounts receivable day 30

34
7. 2. Implementation Schedule
The implementation schedule covers the activities starting from the project construction
to operation period, bid-purchase-trial run of machineries, and commissioning. It is
envisaged that the complete implementation program requires a total of 12 months as
seen in Figure 7. 1.

FIGURE 7. 1 : PROJECT IMPLEMENTATION SCHEDULE

Item Activities Month
Sr. No. 1-2 3-5 6-9 10 11 12
1 Preparatory Period, 1. Approval xxxx
Of Feasibility Study, 2.
Financial Arrangement
2 Tender Document Preparation xxxxx xxxx
For Machinery Supply
3 Tendering For Machinery xxxxx xxxx
Supply
4 Tender Evaluation, xxx
Negotiation,, And Contracting
5 Design of Installation of xxxxx
Machinery And Equipment
6 Equipment Delivery xxx
7 Erection xxx
8 Manpower Recruit And xxx
Training
9 Trial Run And Commissioning xxx
10 Start Of Operation xxx

The formation of implementation team, employment of the implementation consultant

and financial arrangement will be carried out within one month after the approval of the
feasibility study.

Machinery and Equipment: Tender document preparation for production machinery and
equipment will start a month after project approval and will take 2 month period.
Tender floating will start 2 month after the approval of the project study and will be
completed within 2 month. Tender evaluation, contract negotiation, signing and LC
opening, which will also start 2 months after the approval of the project, will be
completed within 1 month. Installation diapers and wet wipes manufacturing machinery

35
and equipment will start after 4 months from project approval and supply will be
completed within 5 months‟ time frame from contract is signed.

Erection of machinery and equipment will start after completion of the machinery and
equipment delivery and will take one month. Delivery of raw materials will be arranged
before of erection of machinery and equipment is completed.
Rent of Warehouse: Finalizing of the renting of warehouse from industrial park will
commence after 2 months from approval of the project in consideration of machine
arrival to the park.

Recruitment and training of human resource will start 6 months after the project
approval and before the start of erection of machinery and equipment and will continue
up to commissioning and start up. The production will start commissioning 11 months
after the project approval and will be completed in 1 month. Similarly, technology and
knowhow transfer will be conducted starting from together with the erection and
commissioning activities for one-month duration.

Finally, the industry will start production at the end of 12th months from the approval of
the project and be operational then after. Moreover, project activities will be handled by
project management tools so as to optimize time and project cost utilization towards
realization of the project on the ground with minimum project implementation cost and
time as per the planned duration. Many activities of the project may undertake in
similar period if it does not need sequential work plan.

7. 2. 1. Implementation Cost
The diapers and wet wipes production project implementation cost for which comprises
project office running and follow-up expenses, and erection and commissioning is
estimated at ETB 2. 27 million the breakdown of which is indicated in Table 7. 2.

36
TABLE 7. 2 : IMPLEMENTATION COST
Sr. Duration Cost (In 1000 ETB)
Position No.
No. (Month) Monthly Annual
I Project Staff
1. 1 Project Manager 1 12 20,000. 00 240. 00
1. 1. 1 Project Coordinator 1 12 10,000. 00 120. 00
1. 1. 2 Executive Secretary 1 12 10,000. 00 120. 00
Finance And
1. 2 0. 00
Administrative Team
1. 2. 1 Accountant 1 12 8,000. 00 96. 00
Personnel And General
1. 2. 2 1 12 5,000. 00 60. 00
Service
1. 2. 3 Driver 0 12 15,000. 00 0. 00
1. 2. 4 Security Guards 1 12 5,000. 00 60. 00
Procurement And Supply
1. 3 0. 00
Team
1. 3. 1 Procurement Expert 1 12 8,000. 00 96. 00
Supplies And Store
1. 3. 2 1 12 5,000. 00 60. 00
Management Expert
1. 3. 3 Store Keeper 1 12 5,000. 00 60. 00
Engineering, Technical
1. 4 And Quality Control 0. 00
Team
1. 4. 1 Coffee Expert 1 12 10,000. 00 120. 00
1. 4. 2 Civil Engineer 1 12 12,000. 00 144. 00
1. 4. 3 Mechanical Engineer 1 12 12,000. 00 144. 00
Electrical And
1. 4. 4 1 12 12,000. 00 144. 00
Automation Engineer
Sub Total 1,464. 00
Ii Project Supplies And Office Running
Sr. Descriptions Qty. Unit Unit Cost Amount
1 Fax 1 Pcs 16,000. 00 16. 00
2 Telephone 1 Pcs 17,500. 00 17. 50
3 Printer 1 Pcs 20,000. 00 20. 00
4 Office Furniture 5 Set 21,500. 00 107. 50
150,000.
5 Office Running Cost 1 Set 150. 00
00
Sub Total 311

Iii Detailed Design, Supervision, Erection And Commissioning

37
 Engineering, Erection
1 And Commissioning 130. 00
Service
Sub Total 130. 00
Iv Erection Machineries Rent
Sr. Rate/ Duration
Descriptions Quantity Cost
No. Day Days
30,000.
1 Crane 12 1 360. 00
00
Grand - Total 2,265. 00

7. 3. Office Furniture and Equipment

The office furniture and equipment are vital component of the initial investment for
conducive environment of the production processes. The details of the furniture and
equipment are presented in Table 7. 3. The cost of furniture and equipment is estimated
at ETB 3. 15 million .

TABLE 7. 3: OFFICE FURNITURE AND EQUIPMENT COST, ETB

Total Price
Sr. Unit Price
Item Description Unit Quantity (In 0000
No. (ETB)
ETB)
Presidential High Back Gas
1
Lift Swivel
Chair (Genuine Leather) And
Set 1 167,000. 00 167. 00
Executive

Desk, Hanging Side Cabinet

Conference Table And 8

2 Set 3 130,000. 00 390. 00
Standard Chairs

4 High Quality Guest Chair Pcs 11 10,500. 00 115. 50

Executive Managerial Table

5 And Chair With High Back Set 4 40,000. 00 160. 00
Gas Lift Swivel, Side Cabinet

6 Office Chair And Table Pcs 23 20,000. 00 460. 00

7 Shelves Pcs 4 15,000. 00 60. 00

8 Filing Cabinet Pcs 4 15,000. 00 60. 00

38
9 Guest Chairs Pcs 14 13,500. 00 189. 00

10 Laptop Pcs 13 21,000. 00 273. 00

Personal Computers With

11 Pcs 7 20,000. 00 140. 00
Accessories

12 Printer Pcs 2 16,000. 00 32. 00

13 Copy Machine Pcs 2 40,000. 00 80. 00

14 Scanner And Fax Machine Pcs 2 22,000. 00 44. 00

15 Telephone System Set 1 75,000. 00 75. 00

Cafeteria Furniture And

16 Set 2 450,000. 00 900. 00
Equipment

Total Cost 3,145. 50

7. 4. Investment
The total investment cost of the project including working capital is estimated at ETB
100. 00 million as shown in Table 7. 4 below. The Owner shall contribute 30% of the
finance in the form of equity while the remaining 70% is to be financed by bank loan.
The foreign component of the project accounts for 37. 19% of the total investment cost.
The total investment cost of the project described below in Table 7. 4 in detail.

TABLE 7. 4 : TOTAL INITIAL INVESTMENT (000 ETB)

Foreign
Sr. No. Cost Items Local Cost Total Cost %
Cost

1. 0 Fixed Investment

1. 1 Land 5. 25
5,250. 00 5,250. 00
Building And Civil
1. 2 31. 36
Work 31,358. 15 31,358. 15
Machinery And
1. 3 40. 91
Equipment 3,719. 00 37,190. 00 40,909. 00

1. 4 Vehicle 3. 15
3,145. 50 3,145. 50

39
 Office Furniture and
1. 5 2. 42
Equipment 2,421. 05 2,421. 05

Sub -Total 45,893. 70 37,190. 00 83,083. 70 83. 08

2. 0 Pre-Operating Cost

2. 1 Pre-Expenditure2 2. 26
2,265. 00 2,265. 00
Interest During First
2. 2 0. 00 0. 00 0. 00
Year/Construction

Sub -Total 2. 26
2,265. 00 2,265. 00

Total Investment
48,158. 70 37,190. 00 85,348. 70 85. 35

3. 0 Working Capital 14. 65

14,651. 82 14,651. 82

Grand Total 62,810. 52 37,190. 00 100,000. 52 100. 00

Foreign Currency 37. 19

* Pre-operating cost includes project implementation cost such as installation, start-up,

commissioning, project engineering, project management etc. and capitalized interest
during construction.
** The total working capital required will reach to ETB 20. 93 million . However, only
the initial working capital of ETB 14. 65 million during the first year of production,
after the project is assumed to be funded through external source. During the remaining
years, the working capital requirement will be financed by funds generated internally
(for detail working capital requirement see Annex 1).

2
Pre-production capital expenditure includes - all expenses for pre-investment studies,
consultancy fee during construction and expenses for company„s establishment, project
administration expenses, commission expenses, preproduction marketing and interest
expenses during construction.

40
7. 3. Production Costs
The total production cost at full capacity operation is estimated at ETB 65. 10 million
as detailed in Table 7. 5 below. Most of the cost goes to raw materials and inputs i. e.
ETB 28. 29 million that is 43. 45% of the production costs.

TABLE 7. 5 : PRODUCTION COST (000 ETB)

Items Cost %

Raw Material And Inputs

28,285. 38 43. 45
Utilities 1,103. 24 1. 69
Maintenance And Repair 6,340. 51 9. 74
Labor Direct 9,158. 40 14. 07
Labor Overheads 8,568. 00 13. 16
Administration Costs 450. 00 0. 69
Cost of Marketing And Distribution 300. 00 0. 46
Land and Utility Development Renewal
Payment Cost 15. 00 0. 02
Total Operating Costs 54,220. 53 83. 29
Depreciation 5,241. 16 8. 05
Cost of Finance 5,635. 03 8. 66
Total Production Cost 65,096. 72 100. 00

7. 4. Bank Loan Repayment Schedule

The total amount of bank loan including interest will be fully paid back within ten
years‟ time (See Table 7. 6).

41
TABLE 7. 6 : BANK LOAN REPAYMENT SCHEDULE (X103 ETB)
Year Repayment Interest Total
Disbursement Debt Balance Payment
Interest Payable
Per Year
Year 0 70,000. 36
Year 1 7,000. 04 63,000. 33 8,050. 04 15,050. 08
Year 2 7,000. 04 56,000. 29 7,245. 04 14,245. 07
Year 3 - 7,000. 04 49,000. 25 6,440. 03 13,440. 07
Year 4 - 7,000. 04 42,000. 22 5,635. 03 12,635. 07
Year 5 - 7,000. 04 35,000. 18 4,830. 03 11,830. 06
Year 6 - 7,000. 04 28,000. 15 4,025. 02 11,025. 06
Year 7 - 7,000. 04 21,000. 11 3,220. 02 10,220. 05
Year 8 - 7,000. 04 14,000. 07 2,415. 01 9,415. 05
Year 9 - 7,000. 04 7,000. 04 1,610. 01 8,610. 04
Year 10 - 7,000. 04 (0. 00) 805. 00 7,805. 04
Total 70,000. 36 70,000. 36 315,001. 64 44,275. 23 114,275. 59

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